CMS, which is overseen by the U.S. Department of Health and Human Services, said the move was necessary because of a February ruling by a federal court in New Mexico, which found that the federal government was using an inaccurate formula for allocating the payments. Last year, CMS provided $36 million, which was an approximate 42% decrease from the $63 million doled out the year before.

The Trump administration is halting billions of dollars in payments required under the ACA, citing a district court decision in New Mexico from earlier this year.

The Congressionally mandated risk adjustment program of the Affordable Care Act redistributes funds from plans with lower-risk enrollees to plans with higher-risk enrollees, helping to ensure that sicker individuals can receive coverage by sharing the cost of covering them.

The payments are meant to help stabilise health insurance markets by compensating insurers that had sicker, more expensive enrollees in 2017.

The suspension of the payments comes amid other efforts by the Trump administration to try to chip away at the landmark health care law.

That's bad news for the chronically ill, the disabled, the elderly and all others whose health care costs can run considerably higher than average.

"It has caused insurer collapses and market exits that reduced competition". The administration could just as easily have listened to a judge in MA who ruled the opposite way or awaited the results of an appeal. Insurers say the sudden halting of those payments creates uncertainty at a critical time, as they are now developing their premiums for 2019. Administration officials tout these plans as more affordable, but they're cheaper because they don't have to meet the ACA's requirements for decent health plans, like including maternity care and prescription drug coverage, and charging the same rate for people with preexisting conditions.

The move sent shock waves through the insurance industry, which claimed that such market disruption could have near-immediate consequences for insured populations. "That will increase competition, and competition will help keep prices down".

"Any action to stop disbursements under the risk adjustment program will significantly increase 2019 premiums for millions of individuals and small-business owners, and could result in far fewer health plan choices", said Justine G. Handelman, a senior vice president of the Blue Cross and Blue Shield Association.

When the Republican-controlled Congress' effort to repeal the ACA died previous year, it appeared the law had survived.

Insurance is normally based on risk, with premiums costing more for clients who are expected to require more healthcare services.

President Barack Obama's signature law, the Affordable Care Act was signed into law in March 2010.